Currencies
The U.S. dollar had its first weekly decline in a month against the yen as evidence mounted that the U.S. economic recovery is weakening. The dollar also weakened for the second week in three against the euro. For those currency traders not on vacation, the two key themes of the week were the Fed meeting Tuesday and Wednesday's deadline for CEOs and CFOs to sign off on corporate records in accordance with the Security and Exchange Commission's (SEC) mandate.

The recent spate of weak U.S. economic data has focused attention on the United States and triggered speculation that downturns in other economies could prove deeper. The euro area and parts of Asia rely heavily on U.S. growth and U.S. importation of their goods. Adding to doubts are worries that other central banks will be less aggressive than the Federal Reserve in lowering interest rates. The U.S., viewed more than ever as the barometer for global growth, is dominating trader focus, pushing aside the costs of the ongoing floods in Eastern Europe or the possible shelving of the Stability Pact by Germany.

The yen's rally against the dollar may stall as government officials step up rhetoric and fuel speculation that the Bank of Japan will intervene. Last week officials again complained that a stronger yen is unfavorable and doesn't match economic fundamentals. The comments fueled speculation the Japanese government would sell yen in a bid to reverse the rally that has made the country's exports less competitive and is crimping a nascent economic expansion. Exports accounted for half of Japan's 1.4 percent growth in the first quarter, which followed three straight quarters of contraction. Japan sold $34 billion of its currency in May and June - a record for one quarter - in an attempt to halt a rally in the currency.

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